Working with Realtors®....Do I Need One??
When buying or selling real estate, you may find it helpful to have a real estate agent assist you. Real estate agents can provide many useful services and work with you in many different ways. In some real estate transactions the seller and buyer will have their own agent, and sometimes the same agent works for both the buyer and the seller. It is important for you to know what duties the agent owes you in each of these situations.
Members of the Canadian Real Estate Association are required to abide by a strict Code of Ethics and Standards of Business Practice, which serves to protect the buying and selling public alike. One of the ethical obligations embodied in the Code requires that Realtors® disclose who they are representing in a real estate transaction.
The Agency Relationship
REALTORS work within a legal relationship called agency. The agency relationship exists between you, the Client, and the brokerage, your Agent.
The essence of the agency relationship is that the Agent has the authority to represent the Client in dealings with others. Agents are obligated to protect and promote the interests of their clients as they would their own. Specifically, the Agent has the following fiduciary duties:
(1) Loyalty. The Agent must protect the Client’s negotiating position at all times, and disclose all known facts which may affect or influence the Client’s decision.
(2) Obedience. The Agent must obey all lawful instructions of the Client.
(3) Confidentiality. The Agent has an obligation to keep the confidences of the Client.
(4) Reasonable care and skill in performing all assigned duties.
(5) Full disclosure of information that might affect the value of the property.
(6) Full accounting for all money and property placed in the Agent’s hands while acting for the Client.
You can expect competent service from your Agent, knowing that the brokerage is bound by ethics and the law to be honest and thorough in
every real estate transaction.
This approach is reflected in the standard real estate contracts produced by the Alberta Real Estate Association. Please feel free to ask your REALTOR to show you the contracts appropriate to your real estate transaction.
The Client, as well, has duties towards the Agent.
(1) You have the duty to compensate the Agent for the expenses that the Agent incurs as a result of carrying out the Agent's responsibilities.
(2) You have the duty to pay the agreed-upon remuneration or compensation as outlined in the signed contract.
In addition, you have a duty to disclose material facts to the Third Party in the real estate transaction.
As mentioned in paragraph one there are two main types of relationships you will find in most real estate transactions:
Single Agency
Single Agency occurs when both Buyer and Seller are represented by their own Agent in a real estate transaction. Each Agent owes full fiduciary duties to its own Client. (Assuming both Agents work for different brokerages)
Dual Agency
Dual Agency occurs when one brokerage, trading in real estate from one or more locations, represents two parties with respect to the potential purchase of a property.
Since the brokerage is working for both parties, it is necessary to limit (as described below) the fiduciary duties owed to both Clients. These limitations on the fiduciary duties will also apply for buyers when one brokerage represents two or more buyers.
In real estate sales, the Dual Agent:
(a) will not, without prior written permission of the applicable Client, disclose to the other Client(s):
(i) that the Seller will accept a price less than the asking price
(or a countered selling price),
(ii) that the Buyer will pay a price higher than the price offered,
(iii) the reason the Seller is selling and the Buyer is buying, and
(iv) the terms and conditions of competing offers.
(b) will disclose to both parties all facts known to the Dual Agent that materially affect or may materially affect the marketability or value of the property.
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